The following tables present the activity in the allowance for loan losses for the three months ending September 30, 2012 and 2011, and the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of September 30, 2011 (in thousands):

Non

Residential

Residential

Municipal

Commercial

Real estate

Real estate

Construction

Consumer

Obligations

Total

September 30, 2012

Allowance for loan losses

Beginning balance

$

2,159

$

3,786

$

6,666

$

5,167

$

392

$

176

$

18,346

Provision for loan losses

(215

)

2,095

875

(729

)

325

(151

)

2,200

Loans charged off

(89

)

(1,051

)

(436

)

(2,292

)

(371

)

-

(4,239

)

Recoveries

18

3

183

2

72

-

278

Total ending allowance balance

$

1,873

$

4,833

$

7,288

$

2,148

$

418

$

25

$

16,585

Ending allowance balance attributable to loans

Individually evaluated for impairment

$

317

$

1,729

$

2,993

$

1,215

$

-

$

-

$

6,254

Collectively evaluated for impairment

1,556

3,104

4,295

933

418

25

10,331

Total ending allowance balance

$

1,873

$

4,833

$

7,288

$

2,148

$

418

$

25

$

16,585

Loans

Loans individually evaluated for impairment

$

1,118

$

8,500

$

19,111

$

5,774

$

-

$

-

$

34,503

Loans collectively evaluated for impairment

180,052

273,245

536,123

92,835

16,170

27,603

1,126,028

Total ending loans balance

$

181,170

$

281,745

$

555,234

$

98,609

$

16,170

$

27,603

$

1,160,531

Non

Residential

Residential

Municipal

Commercial

Real estate

Real estate

Construction

Consumer

Obligations

Total

September 30, 2011

Allowance for loan losses

Beginning balance

$

3,931

$

2,403

$

6,782

$

4,496

$

167

$

37

$

17,816

Provision for loan losses

262

384

1,590

181

154

(21

)

2,550

Loans charged off

(1,014

)

(210

)

(586

)

(501

)

(253

)

-

(2,564

)

Recoveries

28

2

16

-

93

-

139

Total ending allowance balance

$

3,207

$

2,579

$

7,802

$

4,176

$

161

$

16

$

17,941

The following tables present the activity in the allowance for loan losses for the nine months ending September 30, 2012 and 2011, and the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of September 30, 2012 and December 31, 2011 (in thousands):

Non

Residential

Residential

Municipal

Commercial

Real estate

Real estate

Construction

Consumer

Obligations

Total

September 30, 2012

Allowance for loan losses

Beginning balance

$

3,207

$

2,591

$

7,614

$

4,701

$

162

$

13

$

18,288

Provision for loan losses

(892

)

3,782

1,095

977

726

12

5,700

Loans charged off

(461

)

(1,573

)

(1,609

)

(3,538

)

(696

)

-

(7,877

)

Recoveries

19

33

188

8

226

-

474

Total ending allowance balance

$

1,873

$

4,833

$

7,288

$

2,148

$

418

$

25

$

16,585

Ending allowance balance attributable to loans

Individually evaluated for impairment

$

317

$

1,729

$

2,993

$

1,215

$

-

$

-

$

6,254

Collectively evaluated for impairment

1,556

3,104

4,295

933

418

25

10,331

Total ending allowance balance

$

1,873

$

4,833

$

7,288

$

2,148

$

418

$

25

$

16,585

Loans

Loans individually evaluated for impairment

$

1,118

$

8,500

$

19,111

$

5,774

$

-

$

-

$

34,503

Loans collectively evaluated for impairment

180,052

273,245

536,123

92,835

16,170

27,603

1,126,028

Total ending loans balance

$

181,170

$

281,745

$

555,234

$

98,609

$

16,170

$

27,603

$

1,160,531

Non

Residential

Residential

Municipal

Commercial

Real estate

Real estate

Construction

Consumer

Obligations

Total

September 30, 2011

Allowance for loan losses

Beginning balance

$

3,440

$

2,431

$

8,126

$

3,150

$

166

$

55

$

17,368

Provision for loan losses

1,649

780

2,728

3,025

407

(39

)

8,550

Loans charged off

(1,934

)

(674

)

(3,070

)

(2,000

)

(715

)

-

(8,393

)

Recoveries

52

42

18

1

303

-

416

Total ending allowance balance

$

3,207

$

2,579

$

7,802

$

4,176

$

161

$

16

$

17,941

Non

Residential

Residential

Municipal

Commercial

Real estate

Real estate

Construction

Consumer

Obligations

Total

December 31, 2011

Ending allowance balance attributable to loans

Individually evaluated for impairment

$

224

$

477

$

2,994

$

3,748

$

-

$

-

$

7,443

Collectively evaluated for impairment

2,983

2,114

4,620

953

162

13

10,845

$

3,207

$

2,591

$

7,614

$

4,701

$

162

$

13

$

18,288

Loans

Loans individually evaluated for impairment

$

917

$

6,100

$

20,390

$

7,854

$

-

$

-

$

35,261

Loans collectively evaluated for impairment

192,259

260,168

503,095

96,934

16,618

27,066

1,096,140

Total ending loans balance

$

193,176

$

266,268

$

523,485

$

104,788

$

16,618

$

27,066

$

1,131,401

The following table presents individually impaired loans by class of loans as of and for the three months ended September 30, 2012 (in thousands):

Unpaid

Allowance for

Average

Interest

Principal

Recorded

Loan Losses

Recorded

Income

Interest

Balance

Investment

Allocated

Investment

Recognized

Received

With no related allowance recorded

Commercial

$

30

$

30

$

-

$

170

$

-

$

-

Residential real estate

Home equity lines of credit

50

50

-

50

-

-

Multifamily properties

379

48

-

24

-

-

Other

2,869

2,626

-

2,336

-

-

Nonresidential real estate

Owner occupied properties

802

792

-

490

-

-

Non owner occupied properties

6,206

5,701

-

3,797

-

-

Construction

809

509

-

432

-

-

With an allowance recorded

Commercial

1,088

1,088

317

823

4

4

Residential real estate

Home equity lines of credit

1,488

1,488

1,341

813

12

12

Multifamily properties

1,324

1,324

243

1,554

11

11

Other

3,109

2,964

145

3,309

31

24

Nonresidential real estate

Owner occupied properties

8,544

8,543

2,651

8,774

81

81

Non owner occupied properties

4,595

4,074

342

6,449

34

34

Construction

6,387

5,266

1,215

6,494

45

45

Total

$

37,680

$

34,503

$

6,254

$

35,515

$

218

$

211

The following table presents individually impaired loans by class of loans as of and for the nine months ended September 30, 2012 (in thousands):

Unpaid

Allowance for

Average

Interest

Principal

Recorded

Loan Losses

Recorded

Income

Interest

Balance

Investment

Allocated

Investment

Recognized

Received

With no related allowance recorded

Commercial

$

30

$

30

$

-

$

263

$

-

$

-

Residential real estate

Home equity lines of credit

50

50

-

50

-

-

Multifamily properties

379

48

-

273

-

-

Other

2,869

2,626

-

2,094

-

-

Nonresidential real estate

Owner occupied properties

802

792

-

698

-

-

Non owner occupied properties

6,206

5,701

-

2,848

-

-

Construction

809

509

-

256

-

-

With an allowance recorded

Commercial

1,088

1,088

317

950

7

5

Residential real estate

Home equity lines of credit

1,488

1,488

1,341

339

12

12

Multifamily properties

1,324

1,324

243

815

22

22

Other

3,109

2,964

145

3,557

76

64

Nonresidential real estate

Owner occupied properties

8,544

8,543

2,651

9,081

239

237

Non owner occupied properties

4,595

4,074

342

7,406

143

106

Construction

6,387

5,266

1,215

8,017

163

155

Total

$

37,680

$

34,503

$

6,254

$

36,647

$

662

$

601

The following table presents individually impaired loans by class of loans as of, and for the three months ended September 30, 2011:

Unpaid

Allowance for

Average

Interest

Principal

Recorded

Loan Losses

Recorded

Income

Interest

Balance

Investment

Allocated

Investment

Recognized

Received

With no related allowance recorded

Commercial

$

349

$

310

$

-

$

371

$

-

$

-

Residential real estate

Home equity lines of credit

-

-

-

-

-

-

Multifamily properties

-

-

-

-

-

-

Other

2,121

2,121

-

2,325

-

-

Nonresidential real estate

Owner occupied properties

1,011

955

-

587

-

-

Non owner occupied properties

897

897

-

1,044

-

-

Construction

2,036

889

-

909

-

-

With an allowance recorded

Commercial

1,379

1,379

504

2,370

10

5

Residential real estate

Home equity lines of credit

-

-

-

-

-

-

Multifamily properties

868

868

291

869

14

9

Other

2,869

2,850

433

2,755

18

17

Nonresidential real estate

Owner occupied properties

9,471

9,348

1,093

5,123

80

25

Non owner occupied properties

13,667

11,830

2,185

9,870

90

90

Construction

8,962

7,726

3,256

8,459

76

75

Total

$

43,630

$

39,173

$

7,762

$

34,682

$

288

$

221

The following table presents individually impaired loans by class of loans as of and for the nine months ended September 30, 2011 (in thousands):

Unpaid

Allowance for

Average

Interest

Principal

Recorded

Loan Losses

Recorded

Income

Interest

Balance

Investment

Allocated

Investment

Recognized

Received

With no related allowance recorded

Commercial

$

349

$

310

$

-

$

351

$

-

$

-

Residential real estate

Home equity lines of credit

-

-

-

-

-

- -

Multifamily properties

-

-

-

17

-

-

Other

2,121

2,121

-

1,288

-

-

Nonresidential real estate

Owner occupied properties

1,011

955

-

503

-

-

Non owner occupied properties

897

897

-

848

-

-

Construction

2,036

889

-

559

-

-

With an allowance recorded

Commercial

1,379

1,379

504

1,959

17

9

Residential real estate

Home equity lines of credit

-

-

-

-

-

-

Multifamily properties

868

868

291

922

42

28

Other

2,869

2,850

433

2,441

54

51

Nonresidential real estate

Owner occupied properties

9,471

9,348

1,093

2,884

81

26

Non owner occupied properties

13,667

11,830

2,185

10,044

215

210

Construction

8,962

7,726

3,256

8,035

203

189

Total

$

43,630

$

39,173

$

7,762

$

29,851

$

612

$

513

The following table presents loans individually evaluated for impairment by class of loans as of December 31, 2011 (in thousands):

Unpaid

Allowance for

Principal

Recorded

Loan Losses

Balance

Investment

Allocated

With no related allowance recorded

Commercial

$

350

$

310

$

-

Residential real estate

Home equity lines of credit

50

50

-

Multifamily properties

538

538

-

Other

1,703

1,703

-

Nonresidential real estate

Owner occupied properties

1,101

1,101

-

Non owner occupied properties

2,122

2,116

-

Construction

356

319

-

With an allowance recorded

Commercial

733

607

224

Residential real estate

Home equity lines of credit

-

-

-

Multifamily properties

-

-

-

Other

3,859

3,809

477

Nonresidential real estate

Owner occupied properties

10,771

9,798

1,477

Non owner occupied properties

8,476

7,375

1,517

Construction

8,267

7,535

3,748

Total

$

38,326

$

35,261

$

7,443

The following table presents the aging of the recorded investment in past due loans by class of loans as of September 30, 2012 and December 31, 2011 (in thousands):

Loans

Loans over

30-90 days

90 days

Loans not

past due

past due

Nonaccrual

past due

Total

September 30, 2012

Commercial

$

599

$

-

$

968

$

179,603

$

181,170

Residential real estate

Home equity lines of credit

827

39

768

98,658

100,292

Multifamily properties

111

-

48

46,624

46,783

Other residential real estate

3,657

-

3,676

127,337

134,670

Nonresidential real estate

Owner occupied properties

3,591

-

1,368

273,240

278,199

Non owner occupied properties

1,881

-

6,305

268,849

277,035

Construction

737

-

1,601

96,271

98,609

Consumer

Credit card balances

32

66

-

6,399

6,497

Other consumer

13

-

79

9,581

9,673

Municipal obligations

-

-

-

27,603

27,603

Total

$

11,448

$

105

$

14,813

$

1,134,165

$

1,160,531

Loans

Loans over

30-90 days

90 days

Loans not

past due

past due

Nonaccrual

past due

Total

December 31, 2011

Commercial

$

692

$

74

$

1,175

$

191,235

$

193,176

Residential real estate

Home equity lines of credit

1,094

-

910

92,676

94,680

Multifamily properties

-

-

-

36,756

36,756

Other residential real estate

5,854

112

4,415

124,451

134,832

Nonresidential real estate

Owner occupied properties

2,623

-

2,270

247,875

252,768

Non owner occupied properties

3,942

-

4,358

262,417

270,717

Construction

265

-

1,897

102,626

104,788

Consumer

Credit card balances

60

32

-

6,400

6,492

Other consumer

37

1

626

9,462

10,126

Municipal obligations

-

-

-

27,066

27,066

Total

$

14,567

$

219

$

15,651

$

1,100,964

$

1,131,401

Troubled Debt Restructurings:

The Company has allocated $2,837,000 and $2,074,000 of specific reserves to customers whose loan terms have been modified in troubled debt restructurings as of September 30, 2012 and December 31, 2011, respectively. Troubled debt restructurings totaled $17,129,911 and $15,229,000 as of September 30, 2012 and December 31, 2011, respectively.The Company has not committed to lend additional amounts as of September 30, 2012 and December 31, 2011 to customers with outstanding loans that are classified as troubled debt restructurings.

Modifications involving a reduction of the stated interest rate of the loan were for periods up to three years. Modifications involving an extension of the maturity date were for periods ranging from eight months to twelve months.

The following table presents loans by class modified as troubled debt restructurings that occurred during the three months ending September 30, 2012 and 2011:

2012

2011

Number Of Loans

Pre-Modification OutstandingRecordedInvestment

Post-Modification OutstandingRecordedInvestment

Number Of Loans

Pre-Modification OutstandingRecordedInvestment

Post-Modification OutstandingRecordedInvestment

Troubled Debt Restructurings:

Commercial

1

$

31,757

$

29,979

-

$

-

$

-

Residential real estate

Home equity lines of credit

-

-

-

-

-

-

Multifamily properties

-

-

-

-

-

-

Other residential real estate

-

-

-

1

568,000

568,000

Nonresidential real estate

Owner occupied properties

-

-

-

1

1,700,000

1,700,000

Non owner occupied properties

-

-

-

-

-

-

Construction

-

-

-

-

-

-

Consumer

Credit card balances

-

-

-

-

-

-

Other consumer

-

-

-

-

-

-

Municipal obligations

-

-

-

-

-

-

Total

1

$

31,757

$

29,979

2

$

2,268,000

$

2,268,000

The following table presents loans by class modified as troubled debt restructurings that occurred during the nine months ending September 30, 2012 and 2011:

2012

2011

NumberOfLoans

Pre-ModificationOutstandingRecordedInvestment

Post-ModificationOutstandingRecordedInvestment

NumberOfLoans

Pre-ModificationOutstandingRecordedInvestment

Post-ModificationOutstandingRecordedInvestment

Troubled Debt Restructurings:

Commercial

2

$

190,168

$

184,336

-

$

-

$

-

Residential real estate

Home equity lines of credit

-

-

-

-

-

-

Multifamily properties

1

485,000

48,238

-

-

-

Other residential real estate

1

187,105

186,074

1

568,000

568,000

Nonresidential real estate

Owner occupied properties

1

153,891

153,891

1

1,700,000

1,700,000

Non owner occupied properties

-

-

-

3

10,881,848

10,839,519

Construction

5

3,204,872

2,957,005

-

-

-

Consumer

Credit card balances

-

-

-

-

-

-

Other consumer

-

-

-

-

-

-

Municipal obligations

-

-

-

-

-

-

Total

10

$

4,221,036

$

3,529,544

5

$

13,149,848

$

13,107,519

The troubled debt restructurings described above increased the allowance for loan losses by $2,871 and resulted in charge-offs of $0 during the third quarter ending September 30, 2012 and charge offs of $1,112,147 for the nine months ending September 30, 2012.

The following table presents loans by class modified as troubled debt restructurings for which there was a payment default within twelve months following the modification during the period ending September 30, 2012:

Troubled Debt Restructurings

That Subsequently Defaulted:

Number of Loans

Recorded Investment

Commercial

1

$

154,357

Residential real estate

Home equity lines of credit

Multifamily properties

1

48,238

Other residential real estate

1

465,293

Nonresidential real estate

Owner occupied properties

Non owner occupied properties

3

3,234,737

Construction

2

1,616,100

Consumer

Credit card balances

Other consumer

Municipal obligations

-

-

Total

8

$

5,518,725

A loan is considered to be in payment default once it is 30 days contractually past due under the modified terms.

The troubled debt restructurings that subsequently defaulted described above increased the allowance for loan losses by $0 and resulted in charge-offs of $477,091 during the third quarter ending September 30, 2012 and $1,739,238 for the nine months ending September 30, 2012.

Credit Quality Indicators:

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt, including: current financial information, historical payment experience, credit documentation, public information and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans as to credit risk. This analysis includes loans with an outstanding balance greater than $100,000 and non-homogeneous loans, such as commercial and commercial real estate loans. This analysis is performed on a quarterly basis. Loans with balances below $100,000 and homogenous loans, such as residential real estate and consumer loans, are analyzed for credit quality based on aging status, which was previously presented. The Company uses the following definitions for risk ratings:

Special Mention. Loans classified as special mention have a potential weakness that deserves management's close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution's credit position at some future date.

Substandard. Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Doubtful. Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable.

Based on the most recent analysis performed, the risk category of loans by class of loans is as follows (in thousands):

The entire disclosure for claims held for amounts due a entity, excluding financing receivables. Examples include, but are not limited to, trade accounts receivables, notes receivables, loans receivables. Includes disclosure for allowance for credit losses.

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.